Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PLEASE ANSWER THESE QUESTIONS !! Assume that the government budget is initially in balance. a)With the onset of a recession, illustrate, using the multiplier model,
PLEASE ANSWER THESE QUESTIONS !!
Assume that the government budget is initially in balance.
- a)With the onset of a recession, illustrate, using the multiplier model, the likely effects of this recession on an economy and discuss how the government's budget balance might be impacted.
- b)During this recession, the government decides to cut spending (G). Show the impact of this cut on the diagram drawn in (a). Will this improve, worsen or leave the budget balance unchanged (compared to what it was in (a) above)?
- c)Should government be considering measures of austerity, such as a cut in spending, during a recessionary period? Why/why not?
- d)Discuss the main factors that government should consider before they decide on the most appropriate fiscal policy measures to implement.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started